Marc Rennard is the new man in charge of Orange Digital Ventures (ODV), Orange’s corporate venturing unit. The fund represents Orange’s commitment to innovation, both internally and externally, as well as securing capital returns. Rennard has been in post as the new CEO and chairman since May 2018, and as an Orange insider, is keen to coordinate ODV with other parts of the Orange Group.
ODV currently has a portfolio of 16 startups, including Monzo, the digital bank that raised £71m ($91m) in its series D last year. ODV has €150m ($170m) available for investment, including a dedicated African fund of €50m. The African fund was established before a partnership was forged with Google to allow the internet group to leverage ODV’s sourcing of startups and enable them to explore co-investment opportunities in the Middle East and Africa (see Innovative region).
Rennard said: “We have an interesting portfolio. We are very proud of it because it is well-balanced, with some very promising startups. My job is on one hand to invest in a company, but on the other hand to partner these with the various businesses within Orange.”
Rennard is a consummate insider. Previously in charge of the expansion of mobile banking services, which included launching Orange Bank in France and the development and growth of African mobile money solution Orange Money, Rennard knows the innovation side of Orange well, which he believes will help Orange Digital Ventures differentiate itself from other European CVCs. Rennard is clear that trumpeting ODV’s existing portfolio will not get them anywhere.
“I start with an interesting portfolio, one that is beautiful. But I can imagine that everybody can say that. Why are we so different?
“We believe we are different, because at Orange we have more than 5,000 people working in the innovation field. We are used to investing in startups, and on top of that, we are used to cooperating with startups. We have a lot of tools to leverage a startup. For example, we have a strong network of 15 accelerators – the Orange Fab – all around the world. We have training sessions, we have mentoring, we welcome startups to our premises, we have business partnerships, technological partnerships.
“Let me give you some examples. When we invested in Morphisec, a startup working in cybersecurity, it was a normal investment. But now we can include their product in our Orange business services portfolio, our corporate business side, in order to help the startup to reach scale.”
ODV has also had success incorporating other portfolio companies into Orange’s offerings. ODV invested in Famoco’s €11m series B in February 2017, and has since used Famoco’s technology in numerous Orange affiliates.
“Customer identification is a key question in Africa, because not everyone has identity papers or a passport. Famoco is providing the tools, especially in emerging countries, to help the operator identify a customer, to facilitate a scan of the ID, to take a photo, and so on and so forth.”
Orange’s key verticals are, for a major European telecom with a large presence in Africa, unsurprising. Like many other telecoms, network virtualisation is seen as a key technology for improving the company’s main offering. Rennard is more straightforward.
“Network virtualisation is at the heart of Orange strategy and thus a key focus for ODV. When you want to optimise your capital expenditure, based on the size of the traffic at 10pm compared with 10am, you need to analyse big data. There are a lot of startups working in that field. The optimisation of the network will be key for 5G development, because 5G means a lot of sites, and if we want to optimise we will rely on our own forces, as well as partnerships with startups. It is key for us.
“The second pillar of our strategy is about new cybersecurity solutions, such as moving target defence. The third pillar is all about fintech and insurtech, for example fraud detection, authentication solutions and mobile payments.”
These are technologies about which Rennard is enthusiastic, and while they comprise large parts of the portfolio, ODV does not limit itself there. Its investment focuses include enterprise software-as-a-service solutions, artificial intelligence, internet of things and new business models in Africa and the Middle East. New business models are intended to give African startups a more tailored approach, one suitable for different locations across the continent.
“When you want to evaluate startups in Africa, you need to know the environment, the ecosystem, the legal ecosystem of the country where you operate.”
Compared with established European ecosystems, African markets can seem low-margin and tricky in which to operate. Rennard has the experience to overcome that, having spent over a decade handling Orange’s African affairs, managing 20 affiliates, 110 million customers, including 25 million customers of Orange Money. There, he saw first-hand average smartphone penetration go from below 10% to individual countries, like Mauritius and Tunisia, currently having a penetration of 100%. Now a key growth market for ODV, Rennard is looking to capitalise.
“We are very well prepared because I know from experience what happens in Africa. Africa is one pillar of our approach, but we will be cautious.”
“When you invest in a startup you always have the same approach. So on the one hand investing in Africa is the same, but on the other hand there are some specificities. We want to focus on startup compliance, because we need to be perfect, not just because of the economic risk, but also the reputational risk.”
Rennard knows his turf, but he also knows his limits. Asked about which technologies he thinks might be overhyped, he demurs. “I am not the most famous technology specialist – we have a head of technology. 5G is very promising, cyber and fintech are very important for us. We are investing in the digital world, we are not investing too far away from our strategy.”
That said, Rennard admits Orange could look to spread its net further in the future, with a view to biotech and medical technology in particular. He is justifiably cautious though, saying that, “five years ago, 5G, deep learning, blockchain, these terms were not even on the map”.
He added: “In the future we will be very pragmatic. We need to be agile in order to appoint the right people, even in Orange Digital Ventures, to be able to identify the best possibilities. Every day, I ask myself: ‘Marc, will you miss a unique opportunity because you are not clever enough, because you do not know the environment well enough?’ I have to make a lot of effort to understand what startups propose, because they are very sharp.”
Any doubts Rennard has about his own ability to stay on top of technology are assuaged by his team. At ODV Rennard has joined an existing team, and he is impressed with the quality.
“We have 12 people directly around me, and they are very young, motivated, with a lot of skills. They have not made a lot of mistakes, and I have huge respect for the quality of the job done.”
Despite Orange having multiple investment arms, under its holding company Orange Digital Investments, including a partnership with Iris Capital Management that focuses on digital venture, Rennard is clear that ODV is the key for Orange.
“I have been appointed to establish a more important and independent ODV fund and make this grow, but it will remain a CVC with strong and permanent links with the rest of Orange Group.”
Looking forward, Rennard has three priorities. The first is to set up the new ODV, with the administrative tools to manage portfolio companies properly. The second is to keep developing partnerships with other companies in the ecosystem. Rennard is proud of the recent deal with Google, but the work remains to turn it in to real value for all involved.
“We are working hard in order to have our first investment in a startup together, I hope by the end of this year or next year. It is a key point, because we create value for us, for the startup, and I hope also for Google.”
Rennard also wants to improve ODV’s ties with the rest of Orange. He intends to do that by improving the dealflow, getting to startups earlier, and looking for leverage within Orange’s business units as soon as possible. As Rennard says: “It is not very easy to organise a relationship with a startup where you have between two and 20 people, and a big group such as Orange where we have 150,000 people. It is a huge job.”
Having been across the African continent, and on the inside at Orange for well over a decade, as well as once managing a ski resort, and now alongside a staff with a strong investment track record, Marc Rennard sounds like he is ready for what the future brings.